Hyperinflation-era German currency
Source: Flikr Creative Commons
Welcome back to the monthly inflation! debasement! update. We’re keeping track of that nefarious phenomenon of which Speaker of the House Paul Ryan warned that, no matter what the data tell us, accelerating inflation and a depreciating currency are just around the corner. Here are the latest data through May 2016:
- Inflation: same as in April and March. Prices overall rose 1.0 percent since May 2015. If we exclude food and energy prices, the Consumer Price Index rose 2.2 percent over the past twelve months, just as it did in April. There are no signs of accelerating inflation at either the consumer level or at the producer level.
- Debasement: The dollar continued to appreciate, rising about 1 percent in the past month and 5 percent according to the real trade-weighted exchange rate.
The real earnings release was not so rosy. The inflation-adjusted average wage rose 1.4 percent from May 2015 to May 2016, slower than the trend in April. The long-term trend in productivity and real wage growth is roughly 2% or more, but since labor productivity seems to be growing at a less than 1 percent rate over the same period I’ll take it.